Securities Information Center (SIC) appreciates the opportunity to comment on the proposed amendments to Rule 17AD-7 concerning recordkeeping requirements. Our comments pertain to the possible destruction of securities certificates which are now held in hardcopy form.

"We are proposing to amend paragraph (f) of Rule 17Ad-7 to clarify that records, including cancelled securities certificates, stored electronically or micrographically in accordance with the provisions of Rule 17Ad-7 may serve as a substitute for hard copy records required to be maintained pursuant to Rule 17Ad-6. Accordingly, this "substitution" provision would allow, but would not mandate, the destruction of hard copy records, including securities certificates, after electronic or micrographic records have been created in conformity with Rule 17Ad-7(f)."

SIC currently maintains the Lost & Stolen Program where all lost, stolen, missing and counterfeit certificates get reported. The primary purpose of the database is to remove illicit securities from the marketplace but the industry has been using SIC to report cancelled certificates to help reduce risk over the past few years.

SIC would respectfully suggest that any physical certificates earmarked to be destroyed should be reported to the SIC database so that the possibility of these certificates resurfacing and being traded would be minimized, thus reducing the risk of destroying the certificates. We believe SIC can help reduce any risk by citing an example from a Proposed Rule dated October 2, 2000 relating to the Processing Requirements of Cancelled Security Certificates (Release No. 34-43401; File No. S7-18-00):

"In a 1992 case, approximately $111 billion face amount of cancelled bond certificates disappeared after being delivered from a transfer agent's warehouse to a certificate destruction vendor. The certificates, representing many well-known public companies, later began to resurface worldwide. A number of banks and brokers as well as individuals were defrauded through sales of the cancelled certificates for cash or through use of the cancelled certificates as loan collateral. The bulk of these cancelled certificates still remain unaccounted for and continue to resurface in the marketplace."

We thank you for the opportunity to make these comments. Please contact me at (617) 856-2342 if you need any additional information, or have questions or comments regarding the above.